OPINION: The Victorian Supreme Court handed down a landmark ruling on 28 August 2001 [Joseph Gutnick v Dow Jones & Company Inc. [2001] VSC 305] on the contentious topic of jurisdiction on the Internet.

In response to an application to stop a defamation claim being heard in Victoria, Justice Hedigan held that the "publication" of an online article occurred in the jurisdiction where the article was downloaded, regardless of where it was uploaded or where the publisher's server resided.

The global media giant Dow Jones, published an article entitled Unholy Gains--which Gutnick claims defamed him--in a paper-based and an Internet form--in its weekly financial journal, Barron's. The online version of the article was uploaded via Dow Jones' Web server which resides in New Jersey.

Over 300,000 copies of the relevant edition of the magazine were distributed--98 percent of which were sold in the United States. The magazine had five subscribers in Victoria, including stockbrokers JB Were and two of the large Australian investment institutions, AXA and AMP.

But it was not possible to establish how many Victorians downloaded the story from the Internet. The site recorded about 550,000 hits, less than 0.01 percent of them from people with Australian credit cards. It was not ascertainable how many of these users were Victorian but it was agreed that "several hundred" downloads had taken place in Victoria.

Before the defamation action could be tried in court, the significant issue was which jurisdiction would be the relevant forum. This was a major obstacle for Gutnick as defamation is easier to prove in Australia than it is to prove in the United States, where the First Amendment of the US Constitution guarantees freedom of speech. It would also be less costly than briefing his lawyers to attend proceedings in the United States.

Subscribers downloaded and paid for the article through a Victorian Web browser and the meaning of the article was conveyed to the reader in Victoria. For these reasons, Gutnick succeeded in establishing that Victoria was the relevant jurisdiction. The Victorian Supreme Court will now hear the defamation case, subject to any appeal on the jurisdiction issue by Dow Jones.

This ruling follows international precedents relating to Internet defamation cases. It also follows traditional common law principles of defamation established over several centuries and adapts it to the new Internet age. The judgement follows the path of legal principles that have been able to adapt to new technologies over the years, such as television, telex, fax, radio, and now the Internet and e-mail.

This case is important for all Internet publishers and e-mail users as they may need be answerable to the laws of overseas countries where the information is downloaded. As the Internet has a worldwide reach, foreigners uploading information to the Internet or sending e-mails to Australians need to be aware of Australian laws.

The laws relating to cyberspace are still in their infancy and a landmark ruling such as the Gutnick case is likely to be strongly considered in a multitude of jurisdictions worldwide. Internet publishers will need to be aware of the laws of all other countries that follow this path.

International publishers and media networks may consider restricting access to their Web sites to certain foreigners to avoid unwanted defamation actions. This is a strong public policy consideration that should be factored into this ongoing defamation-jurisdiction debate, particularly as the nucleus of the Internet revolves around the free flow of information around the world.

Jeremy Szwider is a solicitor at Phillips Fox. He can be contacted at jeremy.szwider@phillipsfox.com or on 03 9274 5233.

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